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Federal Judge Allows Alleged EB-5 Fraud Suit to Continue

Sept. 20, 2017

There are several different visa programs available, and each one has a different set of regulations and requirements. However, only one program requires a considerable investment from foreign nationals, which has led to several allegations of EB-5 fraud. While there have been many projects in New York that have been completed by way of these investments, there are other projects that have been the subject of civil lawsuits.

Recently, a federal judge has determined that a lawsuit against a business owner may continue — including the counter suit that the other parties have filed. The judge also stated that both state and federal agencies purportedly have failed to provide the required oversight into the EB-5 program once this particular program was taken under the management of a private firm. The lawsuit was initially filed over allegations that investors defaulted on the loans that the private firm made for a motel and casino project.

The investors then filed a counter suit alleging that the guarantees the firm required were in violation of the rules that regulated the EB-5 program. According to the counter suit, the foreign investors make at-risk loans for which there is no recourse for collection if there is a default. The judge commented that there appears to be some irregularities with this project and the many separate entities through which funds seemed to have been routed.

Due to the fact that the lawsuits were given the green light by this judge, both sides will now have the opportunity to gather more information into the funding of this and other projects by way of depositions from the parties involved. One former government official was investigated after allegedly diverting state tax money into the private firm named in the civil suit. He later committed suicide shortly before he was formally indicted.

It is unclear how this particular case will be settled. However, potential investors may benefit from learning the outcome, especially regarding questions of whether these investments are subject to guarantees. New York residents who believe that they may have been victims of EB-5 fraud could choose to seek information from an immigration professional who can assist them in discerning their immigration status and legal rights.

Source: USA Today, “Lawsuit over scandal-plagued EB-5 program to move forward“, Jonathan Ellis, Sept. 8, 2017